Monday, June 18, 2012

tax lien withdrawal - 6323(j) of the IRS Code


6323 (j) Withdrawal of notice in certain circumstances.

(1) In general.
The Secretary may withdraw a notice of a lien filed under this section and this chapter shall be applied as if the withdrawn notice had not been filed, if the Secretary determines that—

(A) the filing of such notice was premature or otherwise not in accordance with administrative procedures of the Secretary,

 (B) the taxpayer has entered into an agreement under section 6159 to satisfy the tax liability for which the lien was imposed by means of installment payments, unless such agreement provides otherwise,

 (C) the withdrawal of such notice will facilitate the collection of the tax liability, or

 (D) with the consent of the taxpayer or the National Taxpayer Advocate, the withdrawal of such notice would be in the best interests of the taxpayer (as determined by the National Taxpayer Advocate) and the United States.


Any such withdrawal shall be made by filing notice at the same office as the withdrawn notice. A copy of such notice of withdrawal shall be provided to the taxpayer.
 (2) Notice to credit agencies, etc.
Upon written request by the taxpayer with respect to whom a notice of a lien was withdrawn under paragraph (1), the Secretary shall promptly make reasonable efforts to notify credit reporting agencies, and any financial institution or creditor whose name and address is specified in such request, of the withdrawal of such notice. Any such request shall be in such form as the Secretary may prescribe.

Reg §301.6323(j)-1. Withdrawal of notice of federal tax lien in certain circumstances.

 Effective: June 22, 2001.

(a) In general. The Commissioner or his delegate (Commissioner) may withdraw a notice of federal tax lien filed under this section, if the Commissioner determines that any of the conditions in paragraph (b) of this section exist. A notice of federal tax lien is withdrawn by the filing by the Commissioner of a notice of withdrawal in the office in which the notice of federal tax lien is filed. If a notice of withdrawal is filed, chapter 64 of subtitle F, relating to collection, will be applied as if the withdrawn notice had never been filed. A copy of the notice of withdrawal will be provided to the taxpayer. Upon written request by a taxpayer with respect to whom a notice of federal tax lien has been or will be withdrawn, the Commissioner will promptly make reasonable efforts to notify any credit reporting agency and any financial institution or creditor identified by the taxpayer of the withdrawal of such notice. The withdrawal of a notice of federal tax lien will not affect the underlying federal tax lien.

(b) Conditions authorizing withdrawal. The Commissioner may authorize the withdrawal of a notice of federal tax lien upon determining that one of the following conditions exists:

(1) Premature or not in accordance with administrative procedures. The filing of the notice of federal tax lien was premature or otherwise not in accordance with the administrative procedures of the Secretary.

(2) Installment agreement. The taxpayer has entered into an agreement under section 6159 to satisfy the liability for which the lien was imposed by means of installment payments. Entry into an installment agreement may not, however, be the basis for withdrawal of a notice of lien if the installment agreement specifically provides that a notice of federal tax lien will not be withdrawn.

(3) Facilitate collection. The withdrawal of the notice of federal tax lien will facilitate the collection of the tax liability for which the lien was imposed.

(4) Best interests of the United States and the taxpayer.

(i) In general. The taxpayer or the National Taxpayer Advocate (or his delegate) has consented to the withdrawal of the notice of federal tax lien, and withdrawal of the notice would be in the best interest of the taxpayer, as determined by the taxpayer or the National Taxpayer Advocate (or his delegate), and in the best interest of the United States, as determined by the Commissioner.

(ii) Best interest of the taxpayer. When a taxpayer requests the withdrawal of notice of federal tax lien based on the best interests of the United States and the taxpayer, the National Taxpayer Advocate (or his delegate) generally will determine whether the withdrawal of the notice of federal tax lien is in the best interest of the taxpayer. If, however, a taxpayer requests the Commissioner to withdraw a notice and has not specifically requested the National Taxpayer Advocate (or his delegate) to determine the taxpayer's best interest, a finding by the Commissioner that the withdrawal of notice is in the best interest of the taxpayer will be sufficient to support withdrawal. If the Commissioner decides independently of a request by the taxpayer to withdraw a notice of federal tax lien, the taxpayer or the National Taxpayer Advocate (or his delegate) must consent to the withdrawal.

(5) Examples. The following examples illustrate the provisions of this paragraph (b):

Example (1). A owes $1,000 in Federal income taxes. The IRS files a notice of federal tax lien to secure A's tax liability. However, the IRS failed to follow procedure provided by the Internal Revenue Manual (but not required by statute) with regard to managerial approval prior to the filing of a notice of federal tax lien. The Commissioner may withdraw the notice of federal tax lien because the filing of the notice was not in accordance with the Secretary's administrative procedures.

Example (2). A owes $1,000 in federal income taxes. A enters into an agreement to pay the outstanding federal income tax liability in installments. The agreement provides that a notice of federal tax lien may be filed if the taxpayer defaults. A timely pays the installments each month and has not defaulted in any way. Eleven months after entering into the installment agreement, the Internal Revenue Service files a notice of federal tax lien. Noting that there has been no default, the taxpayer asks the Internal Revenue Service to withdraw the notice of federal tax lien. In this situation, the Commissioner may withdraw the notice of federal tax lien because the taxpayer has entered into an installment agreement.

Example (3). A is an employee of X Corporation. A notice of federal tax lien has been filed to secure an outstanding tax liability against A. A, who has no assets and no other secured creditors, has agreed to pay the balance of tax due through payroll deductions at a rate higher than the Internal Revenue Service could obtain through a wage levy in order to get the notice of federal tax lien withdrawn. X Corporation has agreed to allow A to enter into a payroll deduction agreement. In this situation, the Commissioner may withdraw the notice of federal tax lien to facilitate collection.

Example (4). A is owner of a farm machinery dealership against whom a notice of federal tax lien has been filed to secure an outstanding tax liability. A currently is paying the tax liability by an installment agreement. X Corporation has agreed to provide A with 100 tractors to increase A's inventory if the notice of federal tax lien is withdrawn. A asks the Internal Revenue Service to withdraw the notice of federal tax lien. The Commissioner determines that the larger inventory would enable A to generate additional tractor sales. Increased sales would enable A to increase the amount of installment payments and, consequently, reduce the amount of time needed to satisfy the liability. A, who has no other assets or secured creditors, has agreed to modify the installment agreement. The Commissioner may withdraw the notice of federal tax lien because the withdrawal is in the best interest of the taxpayer and the United States.

(c) Determinations by the Commissioner. The Commissioner must determine whether any of the conditions authorizing the withdrawal of a notice of federal tax lien exist if a taxpayer submits a request for withdrawal in accordance with paragraph (d) of this section. The Commissioner may also make this determination independent of a request from the taxpayer based on information received from a source other than the taxpayer. If the Commissioner determines that conditions authorizing the withdrawal are not present, the Commissioner may not authorize the withdrawal. If the Commissioner determines conditions for withdrawal are present, the Commissioner may (but is not required to) authorize the withdrawal.

(d) Procedures for request for withdrawal.

(1) Manner. A request for the withdrawal of a notice of federal tax lien must be made in writing in accordance with procedures prescribed by the Commissioner.

(2) Form. The written request will include the following information and documents—

(i) Name, current address, and taxpayer identification number of the person requesting the withdrawal of notice of federal tax lien;

(ii) A copy of the notice of federal tax lien affecting the taxpayer's property, if available;

(iii) The grounds upon which the withdrawal of notice of federal tax lien is being requested;

(iv) A list of the names and addresses of any credit reporting agency and any financial institution or creditor that the taxpayer wishes the Commissioner to notify of the withdrawal of notice of federal tax lien; and

(v) A request to disclose the withdrawal of notice of federal tax lien to the persons listed in paragraph (d)(2)(iv) of this section.

(e) Supplemental list of credit agencies, financial institutions, and creditors.

(1) In general. If the Commissioner grants a withdrawal of notice of federal tax lien, the taxpayer may supplement the list in paragraph (d)(2)(iv) of this section. If no list was provided in the request to withdraw the notice of federal tax lien, the list in paragraph (d)(2)(iv) of this section and the request for notification in paragraph (d)(2)(v) of this section may be submitted after the notice is withdrawn.

(2) Manner. A request to supplement the list of any credit agencies and any financial institutions or creditors that the taxpayer wishes the Commissioner to notify of the withdrawal of notice of federal tax lien must be made in writing in accordance with procedures prescribed by the Commissioner.

(3) Form. The request must include the following information and documents—

(i) Name, current address, and taxpayer identification number of the taxpayer requesting the notification of any credit agency or any financial institution or creditor of the withdrawal of notice of federal tax lien;

(ii) A copy of the notice of withdrawal, if available;

(iii) A supplemental list, identified as such, of the names and addresses of any credit reporting agency and any financial institution or creditor that the taxpayer wishes the Commissioner to notify of the withdrawal of notice of federal tax lien; and

(iv) A request to disclose the withdrawal of notice of federal tax lien to the persons listed in paragraph (e)(3)(iii) of this section.

(f) Effective date. This section applies on or after June 22, 2001, with respect to a withdrawal of any notice of federal tax lien.

T.D. 8951, 6/21/2001.



IRSIG SBSE-05-0611-037

Withdrawal of Notice of Federal Tax Lien after Release
FULL TEXT:

June 10, 2011

Control No.: SB/SE-05-0611-037

Expiration Date: June 10, 2012

Impacted: IRM 5.12.3

MEMORANDUM FOR DIRECTORS, COLLECTION AREA OPERATIONS DIRECTOR, ADVISORY, INSOLVENCY, AND QUALITY DIRECTOR, FILING AND PAYMENT COMPLIANCE (SB) DIRECTOR, FILING AND PAYMENT COMPLIANCE (WI) DIRECTOR, CAMPUS COMPLIANCE SERVICES (CINCINNATI)

FROM:

Scott D. Reisher /s/ Scott D. Reisher

Director, Collection Policy

SUBJECT:

Withdrawal of Notice of Federal Tax Lien after Release

The purpose of this memorandum is to issue Interim Guidance (IG) for processing requests for withdrawal of notices of federal tax lien after the lien has been released. Internal Revenue Manual (IRM) 5.12.3 , Certificates Relating to Liens, will be revised to include the information in this memorandum. Please ensure that this information is distributed to all affected employees in your organization.

 Internal Revenue Code (IRC) section 6323(j)(1) provides that the Internal Revenue Service (IRS) may (but is not required to) withdraw a Notice of Federal Tax Lien (NFTL) if it is determined that certain criteria are met, including situations when the filing was premature or not in accordance with administrative procedures ( section 6323(j)(1)(A)) or the withdrawal would be in the best interests of the taxpayer and the United States ( section 6323(j)(1)(D)). Effective immediately, we are establishing a policy to allow a withdrawal under paragraphs (A) and (D) of  section 6323(j)(1) when the taxpayer requests a withdrawal after the lien has been released.

This Interim Guidance memorandum sets forth the procedures for these withdrawals based on the current delegation orders. Additional guidance will be provided as revisions to the delegation orders are implemented.

The guidance contained herein regarding conditions for withdrawal is specific to situations where the lien has been released. Conditions for other types of withdrawals remain unchanged. Taxpayers may apply for a withdrawal under any provision of  IRC 6323(j)(1), and, except as otherwise described in this memorandum, all procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for withdrawal remain in effect.

Post-release Lien Withdrawals Under  IRC 6323(j)(1)(A)

A request for withdrawal of a NFTL under    IRC 6323(j)(1)(A) should generally be granted if the following conditions apply:

The taxpayer requests the withdrawal in writing;Note: Form 12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the preferred format for the taxpayer's request; however, any written request that provides sufficient information may by used for processing (seeIRM 5.12.3.32 );
The taxpayer demonstrates that the original NFTL filing was improper or otherwise not in accordance with IRS procedures.
A withdrawal under this provision may be issued whether a certificate of release was issued or the NFTL self-released.

Post-release Lien Withdrawals Under  IRC 6323(j)(1)(D)

A request for withdrawal of a NFTL under  IRC 6323(j)(1)(D) where the underlying lien has been released will generally be granted if the following conditions apply:

The taxpayer requests the withdrawal in writing;Note: Form 12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the preferred format for the taxpayer's request; however, any written request that provides sufficient information may by used for processing (seeIRM 5.12.3.32 ).
The taxpayer fully satisfied the liabilities on the NFTL;
A certificate of release was issued; and
The taxpayer is in compliance with filing requirements.
For purposes of this memorandum, “fully satisfied” includes:

Tax liability was fully resolved by payment or credit offset;
Most circumstances where the tax assessment was abated because the taxpayer is no longer liable for the tax (e.g., amended return filed, reconsideration of additional assessment, innocent spouse determination, or judicial ruling);
Abatement of penalty and/or interest due to reasonable cause resulted in zero balance; or

The taxpayer completed terms of an offer in compromise, including any related collateral agreements.
“Fully satisfied” generally does not include:

Expiration of the statutory period for collection;
Discharge of taxes in bankruptcy; or
NFTLs that were improvidently or erroneously released and are subject to revocation.
For purposes of this memorandum, “in compliance with filing requirements” includes:

All required Individual Master File (IMF) and Business Master File (BMF) returns, including information returns, for the prior three years have been filed; and
Current Estimated Tax Payments and Federal Tax Deposits (FTDs) have been paid.
If the taxpayer has an unfiled return during any of the past three years, or appears to be delinquent with FTDs or Estimated Tax Payments, further investigation may be necessary as determined on a case-by-case basis. The taxpayer will be considered to be in compliance if the return was, or can be, closed for one of the following reasons:

Not liable for the tax period;
Income below the filing requirement;
Little or no tax due or due a refund; or
No longer liable for filing.
The taxpayer may be requested to supply additional information, as necessary, to complete this determination.

Generally, withdrawals will not be granted for self-released liens under  IRC section 6323(j)(1)(D) unless extenuating circumstances are present. The determination to grant such request will be made on a case-by-case basis and with managerial approval. Examples of possible extenuating circumstances are as follows:

Example: A taxpayer is attempting to secure a license required for their vocation (e.g., realtor, insurance sales), but the record of the self-released NFTL is impeding their ability to obtain the license. A review of the account shows the tax liabilities listed on the NFTL were reported as uncollectible due to economic hardship of the taxpayer for most of the ten-year collection period, and the taxpayer had no assets of value. The statutory period for collection on the liabilities has expired. The taxpayer is in compliance with current and the prior three years' tax obligations. Withdrawal of the self-released lien may be granted.

Example: The taxpayer has tentatively been offered an employment position if the self-released lien is withdrawn. The lien self-released due to statute expiration, and the taxpayer is in compliance with all current filing requirements. There is no indication the taxpayer had the ability to make payments, had any assets, or paid unsecured creditors instead of the IRS. Withdrawal of the self-released lien may be granted.

Example: The taxpayer owes tax liabilities that were not included on the self-released lien and are not on any open NFTL. The taxpayer is now in a position to restructure a loan to pay the open liabilities but the self-released lien is hindering that process. The taxpayer is in compliance with current filing requirements. A withdrawal of the self-released lien may be granted.

To consider self-released liens for withdrawal, the taxpayer must be in compliance with filing requirements, as stated above, and the statutory period(s) for collection for the liability(ies) on the NFTL must have expired. Liens that self -released in error and are subject to revocation do not qualify for withdrawal under these procedures. NFTLs that are comprised of a mix of fully satisfied and expired liabilities should be evaluated on a case-by-case basis. NFTLs that contain liabilities that have not been satisfied or expired are not subject to withdrawal under these procedures; however, taxpayers may receive consideration of the withdrawal by following established procedures for requesting a withdrawal of a filed NFTL.

Procedures

Requests for withdrawal of a released NFTL will be processed as follows:

1. Requests will be reviewed by the Collection field employee assigned other balance due modules of the taxpayer. If the taxpayer owes no other modules or the case is not assigned, the request will be forwarded to Advisory for review. Note: The current residence of the taxpayer determines which Advisory office the request should be referred. (See Publication 4235) This supersedes guidance found in Interim Guidance SBSE-05-0411-036.
2. The reviewing employee will control the receipt of the request and document any actions relative to the review on the control system applicable to the employee's function (e.g., Integrated Collection System (ICS)).
3. The reviewing employee will ensure that the conditions for withdrawal set forth above are met.
a. If the conditions are not met, the employee will issue a letter to the taxpayer denying the request and informing the taxpayer of their appeal rights under the Collection Appeal Program (CAP).
b. If conditions for withdrawal are met, the reviewing employee will:
prepare a memorandum outlining the case facts and recommending the withdrawal;
secure his/her manager's approval; and
forward the memorandum, withdrawal request, and other pertinent documents to Advisory for approval.
4. Upon receipt, Advisory will open a Non-Field Other Investigation (NFOI) control on ICS, if not already done, and review the withdrawal package. The extent of the review will depend on the function submitting the package.
a. If the package is received from the Collection Field function and was approved by a Group Manager, Advisory only needs to conduct a cursory review.
b. If the package is received from any other function, Advisory will complete a full review of the package and application and make the withdrawal determination.
Note: Requests for withdrawal received from Appeals as the result of a timely Collection Due Process, Equivalent Hearing, or a Collection Appeal Program case will be processed in accordance with IRM 5.1.9 . Advisory only needs to confirm the accuracy of the Form 13794, Request for Release or Withdrawal of Notice of Federal Tax Lien.
5. Upon concurrence of the withdrawal by Advisory management, Advisory will:
a. Prepare and forward Form 13794 to Centralized Lien Processing (CLP) or input the withdrawal into the Automated Lien System (ALS); and
b. Prepare and forward the Letter 3044, Withdrawal Cover Letter, to CLP. Note: Requests and documents forwarded to CLP should be by secure email.
6. CLP will print the Form 10916, Withdrawal of Filed Notice of Federal Tax Lien, from ALS and then:
a. Send Part 1 to the applicable recording office with the filing fee; and
b. Associate Part 2 with the corresponding Letter 3044 and mail the withdrawal to the taxpayer.
7. Advisory will close its NFOI control on ICS after transmitting the documents to CLP. Actions taken by CLP relative to the withdrawal can be viewed on ALS.
Since this withdrawal occurs after the original tax liability was satisfied, no adjustments will be made to the taxpayer's account to abate the Transaction Code (TC) 360 lien fees previously assessed. Also, no additional lien fee will be charged to the taxpayer's account for the cost of the withdrawal filing.

In addition to the above:

The procedures for distributing copies of the approved withdrawal document will be revised to be consistent with this memorandum. Specifically, Advisory will forward Form 13794 to CLP or input the withdrawal to ALS directly, and CLP will issue a copy of the withdrawal to the taxpayer with the Withdrawal Cover Letter provided by Advisory.
Letter 4026 will be used as the cover letter for all regular withdrawal requests (i.e., those done before the lien is released).
Except as otherwise described in this memorandum, all procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for withdrawal remain in effect.

If you have any questions, please contact me, or a member of your staff may contact Marc Aronin, Program Manager or Kyle Romick, Senior Program Analyst.

cc: Director, Appeals

www.irs.gov


IRSIG SBSE-05-0112-008

Revision to Interim Guidance for Withdrawal of Notice of Federal Tax Lien after Release
FULL TEXT:

January 4, 2012

Control No.: SBSE-05-0112-008

Expiration Date: January 4, 2013

Impacted: IRM 5.12.3

MEMORANDUM FOR DIRECTORS, COLLECTION AREA OPERATIONS DIRECTOR, ADVISORY AND INSOLVENCY DIRECTOR, FILING AND PAYMENT COMPLIANCE (SB) DIRECTOR, FILING AND PAYMENT COMPLIANCE (WI) DIRECTOR, CAMPUS COMPLIANCE SERVICES (CINCINNATI)

FROM:

Scott D. Reisher /s/ Scott D. Reisher

Director, Collection Policy

SUBJECT:

Revision to Interim Guidance for Withdrawal of Notice of Federal Tax Lien after Release

The purpose of this memorandum is to revise the Interim Guidance (IG), previously issued with control number SBSE-05-0611-037, for processing requests for withdrawal of notices of federal tax lien after the lien has been released. This memorandum clarifies satisfaction requirements as they relate to Offers in Compromise, expands guidance relative to partial withdrawals, and updates procedures based on recent programming and form changes. Internal Revenue Manual (IRM) 5.12.3 , Certificates Relating to Liens, will be revised to include the information in this memorandum. Please ensure that this information is distributed to all affected employees in your organization.

 Internal Revenue Code (IRC) section 6323(j)(1) provides that the Internal Revenue Service (IRS) may (but is not required to) withdraw a Notice of Federal Tax Lien (NFTL) if it is determined that certain criteria are met, including situations when the filing was premature or not in accordance with administrative procedures ( section 6323(j)(1)(A)) or the withdrawal would be in the best interests of the taxpayer and the United States ( section 6323(j)(1)(D)). Effective immediately, we are establishing a policy to allow a withdrawal under paragraphs (A) and (D) of  section 6323(j)(1) when the taxpayer requests a withdrawal after the lien has been released.

This Interim Guidance memorandum sets forth the procedures for these withdrawals based on the current delegation orders. Additional guidance will be provided as revisions to the delegation orders are implemented.

The guidance contained herein regarding conditions for withdrawal is specific to situations where the lien has been released. Conditions for other types of withdrawals remain unchanged. Taxpayers may apply for a withdrawal under any provision of  IRC 6323(j)(1), and, except as otherwise described in this memorandum, all procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for withdrawal remain in effect.

Post-release Lien Withdrawals Under  IRC 6323(j)(1)(A)

A request for withdrawal of a NFTL under  IRC 6323(j)(1)(A) should generally be granted if the following conditions apply:

The taxpayer requests the withdrawal in writing; Note: Form 12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the preferred format for the taxpayer's request; however, any written request that provides sufficient information may by used for processing (see IRM 5.12.3.32 ); and
The taxpayer demonstrates that the original NFTL filing was improper or otherwise not in accordance with IRS procedures.
A withdrawal under this provision may be issued whether a certificate of release was issued or the NFTL self-released.

Post-release Lien Withdrawals Under  IRC 6323(j)(1)(D)

A request for withdrawal of a NFTL under  IRC 6323(j)(1)(D) where the underlying lien has been released will generally be granted if the following conditions apply:

The taxpayer requests the withdrawal in writing; Note: Form 12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the preferred format for the taxpayer's request; however, any written request that provides sufficient information may by used for processing (see IRM 5.12.3.32 ).
The taxpayer fully satisfied the liabilities on the NFTL;
A certificate of release was issued; and
The taxpayer is in compliance with filing requirements.
For purposes of this memorandum, “fully satisfied” includes:

Tax liability was fully resolved by payment or credit offset;
Most circumstances where the tax assessment was abated because the taxpayer is no longer liable for the tax (e.g., amended return filed, reconsideration of additional assessment, innocent spouse determination, or judicial ruling);
Abatement of penalty and/or interest due to reasonable cause resulted in zero balance; or
The taxpayer completed terms of an offer in compromise, including any related collateral agreements. Note: The completion of the five-year compliance period after acceptance of the offer is not a condition to determine “fully satisfied.”
“Fully satisfied” generally does not include:

Expiration of the statutory period for collection;
Discharge of taxes in bankruptcy; or
NFTLs that were improvidently or erroneously released and are subject to revocation.
For purposes of this memorandum, “in compliance with filing requirements” includes:

All required Individual Master File (IMF) and Business Master File (BMF) returns, including information returns, for the prior three years have been filed; and
Current Estimated Tax Payments and Federal Tax Deposits (FTDs) have been paid.
If the taxpayer has an unfiled return during any of the past three years, or appears to be delinquent with FTDs or Estimated Tax Payments, further investigation may be necessary as determined on a case-by-case basis. The taxpayer will be considered to be in compliance if the return was, or can be, closed for one of the following reasons:

Not liable for the tax period;
Income below the filing requirement;
Little or no tax due or due a refund; or
No longer liable for filing.
The taxpayer may be requested to supply additional information, as necessary, to complete this determination.

Generally, withdrawals will not be granted for self-released liens under  IRC section 6323(j)(1)(D) unless extenuating circumstances are present. The determination to grant such request will be made on a case-by-case basis and with managerial approval. Examples of possible extenuating circumstances are as follows:

Example: A taxpayer is attempting to secure a license required for their vocation (e.g., realtor, insurance sales), but the record of the self-released NFTL is impeding their ability to obtain the license. A review of the account shows the tax liabilities listed on the NFTL were reported as uncollectible due to economic hardship of the taxpayer for most of the ten-year collection period, and the taxpayer had no assets of value. The statutory period for collection on the liabilities has expired. The taxpayer is in compliance with current and the prior three years' tax obligations. Withdrawal of the self-released lien may be granted.

Example: The taxpayer has tentatively been offered an employment position if the self-released lien is withdrawn. The lien self-released due to statute expiration, and the taxpayer is in compliance with all current filing requirements. There is no indication the taxpayer had the ability to make payments, had any assets, or paid unsecured creditors instead of the IRS. Withdrawal of the self-released lien may be granted.

Example: The taxpayer owes tax liabilities that were not included on the self-released lien and are not on any open NFTL. The taxpayer is now in a position to restructure a loan to pay the open liabilities but the self-released lien is hindering that process. The taxpayer is in compliance with current filing requirements. A withdrawal of the self-released lien may be granted.

To consider self-released liens for withdrawal, the taxpayer must be in compliance with filing requirements, as stated above, and the statutory period(s) for collection for the liability(ies) on the NFTL must have expired. Liens that self -released in error and are subject to revocation do not qualify for withdrawal under these procedures. NFTLs that are comprised of a mix of fully satisfied and expired liabilities should be evaluated on a case-by-case basis. NFTLs that contain liabilities that have not been satisfied or expired are not subject to withdrawal under these procedures; however, taxpayers may receive consideration of the withdrawal by following established procedures for requesting a withdrawal of a filed NFTL.

In situations where more than one person is named on the NFTL (e.g., joint liability) and only one person applies for the withdrawal, the application for withdrawal should be treated as a request for a full withdrawal. However, if the applying taxpayer meets the requirements stipulated above but the other, non-applying taxpayer listed on the NFTL does not, a partial withdrawal after release may be issued.

Note: The Automated Lien System (ALS) is not programmed to generate partial withdrawals after release. These partial withdrawals, and corresponding cover letter, must be manually prepared and issued. Follow normal guidance for filing manual lien documents.

Procedures

Requests for withdrawal of a released NFTL will be processed as follows:

1. Requests will be reviewed by the Collection field employee assigned other balance due modules of the taxpayer. If the taxpayer owes no other modules or the case is not assigned, the request will be forwarded to Advisory for review. Note: The current residence of the taxpayer determines which Advisory office the request should be referred. (See Publication 4235) This supersedes guidance found in Interim Guidance SBSE-05-0411-036.
2. The reviewing employee will control the receipt of the request and document any actions relative to the review on the control system applicable to the employee's function (e.g., Integrated Collection System (ICS)).
3. The reviewing employee will ensure that the conditions for withdrawal set forth above are met.
a. If the conditions are not met, the employee will issue Letter 4711, Withdrawal Decision Letter, to the taxpayer denying the request and informing the taxpayer of their appeal rights under the Collection Appeal Program (CAP).
b. If conditions for withdrawal are met, the reviewing employee will:
prepare a memorandum outlining the case facts and recommending the withdrawal;
secure his/her manager's approval; and
forward the memorandum, withdrawal request, and other pertinent documents to Advisory for approval.
4. Upon receipt, Advisory will open a Non-Field Other Investigation (NFOI) control on ICS, if not already done, and review the withdrawal package. The extent of the review will depend on the function submitting the package.
a. If the package is received from the Collection Field function and was approved by a Group Manager, Advisory only needs to conduct a cursory review.
b. If the package is received from any other function, Advisory will complete a full review of the package and application and make the withdrawal determination. Note: Requests for withdrawal received from Appeals as the result of a timely Collection Due Process, Equivalent Hearing, or a Collection Appeal Program case will be processed in accordance with IRM 5.1.9 . Advisory only needs to confirm the accuracy of the Form 13794-W, Request for Withdrawal of Notice of Federal Tax Lien.
5. Upon concurrence of the withdrawal by Advisory management, Advisory will prepare and forward Form 13794-W to Centralized Lien Processing (CLP) or input the withdrawal into the Automated Lien System (ALS). Note: Requests and documents forwarded to CLP should be by secure email.
6. Form 10916, Withdrawal of Filed Notice of Federal Tax Lien, will be generated from ALS and distributed.
a. CLP will print Part 1of the form and send it to the applicable recording office with the filing fee.
b. Consolidated Production Services (CPS) will print Part 2 of the form and mail it to the taxpayer with the corresponding Letter 3044, Withdrawal After Release Cover Letter, also generated from ALS.
7. Advisory will close its NFOI control on ICS after transmitting the Form 13794-W to CLP. Actions taken by CLP relative to the withdrawal can be viewed on ALS. As part of their closing actions, Advisory may send Letter 4711 to the taxpayer advising of the withdrawal determination.
Since this withdrawal occurs after the original tax liability was satisfied, no adjustments will be made to the taxpayer's account to abate the Transaction Code (TC) 360 lien fees previously assessed. Also, no additional lien fee will be charged to the taxpayer's account for the cost of the withdrawal filing.

Pursuant to  IRC 6323(j)(2), taxpayers may request additional copies of the withdrawal form to be sent to specified third parties. These requests will be worked by the employee assigned the case or Advisory. Copies of the Form 10916 may be obtained through CLP. Copies of the withdrawal cover letter are not available through CLP and are not needed. A general cover letter prepared by the employee may be used to send the copy of the withdrawal form to the specified third party.

In addition to the above:

The procedures for distributing copies of all approved withdrawal documents will be revised to be consistent with this memorandum. Specifically, Advisory will forward Form 13794-W to CLP or input the withdrawal to ALS directly. CPS will issue a copy of the withdrawal to the taxpayer with the Withdrawal Cover Letter systemically generated from ALS.
Letter 4026 will be used as the cover letter for all regular withdrawal requests (i.e., those done before the lien is released).
Except as otherwise described in this memorandum, all procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for withdrawal remain in effect.

If you have any questions, please contact me, or a member of your staff may contact Marc Aronin, Program Manager or Kyle Romick, Senior Program Analyst.

cc: Director, Appeals

www.irs.gov

IRSIG SBSE-05-0411-036

Withdrawal of Notice of Federal Tax Lien in Direct Debit Installment Agreement Situations
FULL TEXT:

April 7, 2011

Control No.: SBSE-05-0411-036

Expiration Date: 04/7/2012

IRM Impacted: 5.12.3

MEMORANDUM FOR DIRECTORS, COLLECTION AREA OPERATIONS DIRECTOR, ADVISORY, INSOLVENCY, AND QUALITY DIRECTOR, FILING AND PAYMENT COMPLIANCE (SB) DIRECTOR, FILING AND PAYMENT COMPLIANCE (WI) DIRECTOR, CAMPUS COMPLIANCE SERVICES (CINCINNATI)

FROM:

Scott D. Reisher /s/ Scott D. Reisher

Acting Director, Collection Policy

SUBJECT:

Withdrawal of Notice of Federal Tax Lien in Direct Debit Installment Agreement Situations

The purpose of this memorandum is to issue Interim Guidance for processing requests for withdrawal of notices of federal tax lien when the taxpayers are in an established Direct Debit Installment Agreement (DDIA). Internal Revenue Manual (IRM) 5.12.3 , Certificates Relating to Liens, will be revised to include the information in this memorandum. Please ensure that this information is distributed to all affected employees in your organization.

Internal Revenue Code (IRC)  section 6323(j) provides that the Internal Revenue Service (IRS) may (but is not required to) withdraw a Notice of Federal Tax Lien (NFTL) if it is determined that certain criteria are met, including if the taxpayer has entered into an installment agreement ( section 6323(j)(1)(B)). Effective immediately, we are expanding current policy to allow a withdrawal under  section 6323(j)(1)(B) when the taxpayer has entered into a DDIA (subject to the conditions specified below).

This Interim Guidance memorandum sets forth the procedures for this type of expanded withdrawal based on the current delegation orders. Additional guidance will be provided as revisions to the delegation orders are implemented.

The guidance contained herein regarding conditions for withdrawal is specific to DDIA situations. Conditions for other types of withdrawals remain unchanged.

Taxpayers may apply for a withdrawal under any provision of  IRC 6323(j), including  6323(j)(1)(B), and, except as otherwise described in this memorandum, all procedures in IRM 5.12.3 and5.12.6 for evaluating and processing requests for withdrawal remain in effect.

Procedures

The following types of taxpayers qualify for withdrawal of the NFTL under this DDIA provision:

Individual Master File (IMF);
Business Master File (BMF) (income tax only); or
BMF out of business (any type of tax).
Generally, a request for withdrawal under this provision will be approved if all of the following conditions are met:

The aggregate unpaid balance of assessments is $25,000 or less; Note: The unpaid balance of assessments includes tax, assessed penalty and interest, and all other assessments on the tax modules. It does not include accrued (i.e., unassessed) penalty and interest.
If pre-assessed taxes are included, the pre-assessed liability (including tax, penalty, and interest up to the date of expected assessment) plus unpaid balance of other assessments must be $25,000 or less;
The total tax liability will be fully paid in 60 months, or the agreement will be fully paid prior to the Collection Statute Expiration Date (CSED), whichever comes first (Use Integrated Data Retrieval System (IDRS) Command Code (CC)ICOMP);
The taxpayer requests the withdrawal in writing; Note: Form 12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the preferred format for the taxpayer's request; however, any written request that provides sufficient information may by used for processing (see IRM 5.12.3.32 ).
The taxpayer is in compliance with other filing and payment requirements;
The taxpayer is under a DDIA;7At least three consecutive electronic payments (generally received on a monthly basis) have been processed under the DDIA and there have been no defaults in payment under this, or any previous, DDIA; and7The taxpayer did not previously have a withdrawal of lien for any of the modules included in the DDIA (e.g., TC 583 dc 03 on module). This excludes previous withdrawals for improper filing under  IRC 6323(j)(1)(A) (e.g., TC 583 dc 02 on module).
Requests for withdrawal from taxpayers in a DDIA will be processed as follows:

1. Requests will be reviewed by the Collection field employee assigned the taxpayer's case or, if the case is not assigned, forwarded to Advisory for review.Note: The filing location of the NFTL determines to which Advisory office the request should be referred. (See Publication 4235)
2. The reviewing employee will control the receipt of the request and document any actions relative to the review on the control system applicable to the employee's function (e.g., Integrated Collection System (ICS)).
3. The reviewing employee will ensure that the conditions for DDIA withdrawal set forth above are met.
a. If the conditions are not met, the employee will issue a letter to the taxpayer denying the request and informing the taxpayer of their appeal rights under the Collection Appeal Program (CAP).
b. If conditions for withdrawal are met, the reviewing employee will:
prepare a memorandum outlining the case facts and recommending the withdrawal;
secure his/her manager's approval on the memorandum; and
forward the memorandum, withdrawal request, and other pertinent documents to Advisory for approval.
4. Upon receipt, Advisory will open a Non-field Other Investigation (NFOI) control on ICS, if not already done, and review the withdrawal package. The extent of the review will depend on the function submitting the package.
a. If the package is received from the Collection Field function and was approved by a Group Manager, Advisory only needs to conduct a cursory review.
b. If the package is received from any other function, Advisory will complete a full review of the package and application to make the withdrawal determination.Note: Requests for withdrawal received from Appeals as the result of a timely Collection Due Process, Equivalent Hearing, or a Collection Appeal Program case will be processed in accordance with IRM 5.1.9 . Advisory only needs to confirm the accuracy of the Form 13794, Request for Release or Withdrawal of Notice of Federal Tax Lien.
5. Upon concurrence of the withdrawal by Advisory management, Advisory will:
a. Prepare and forward Form 13794 to Centralized Lien Processing (CLP) or input the withdrawal directly into the Automated Lien System (ALS); and
b. Prepare and forward Letter 4026, Withdrawal Cover Letter, to CLP. Note: The published Letter 4026 is being revised with the wording as shown on the attachment; however, the current Letter 4026 is sufficient and may continue to be used until the revised letter is published.Note: Requests and documents forwarded to CLP should be by secure email.
6. CLP will print the Form 10916, Withdrawal of Filed Notice of Federal Tax Lien, from ALS and then:
a. Send Part 1 to the applicable recording office with the filing fee; and
b. Associate Part 2 with the corresponding Letter 4026 and mail the withdrawal to the taxpayer.
7. Advisory will close its NFOI control on ICS after transmitting the documents to CLP. Actions taken by CLP relative to the withdrawal can be viewed on ALS. Taxpayers making payments under any other type of installment agreement are not eligible for consideration for withdrawal under the conditions specified above unless they convert to a DDIA and otherwise meet the conditions. Taxpayers are not precluded, however, from requesting a withdrawal under any provision of the  IRC 6323(j).
If a taxpayer defaults on making payment under the DDIA after the NFTL is withdrawn, a new notice of lien may be filed, if appropriate.

Note: The above revisions apply only to a taxpayer's eligibility for withdrawal consideration. They do not impact the criteria for a taxpayer's eligibility for a DDIA.

In addition to the above:

The method of distributing copies of other approved withdrawal documents will be revised to be consistent with this memorandum. Specifically, Advisory will forward Form 13794 to CLP or input the withdrawal to ALS directly, and CLP will issue a copy of the withdrawal to the taxpayer with the Withdrawal Cover Letter provided by Advisory.
Letter 4026 will be used as the cover letter for all regular withdrawal requests (i.e., those done before the lien is released).
Except as otherwise described in this memorandum, all procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for withdrawal remain in effect.

If you have any questions, please contact me, or a member of your staff may contact Marc Aronin, Program Manager or Kyle Romick, Senior Program Analyst.

Attachment: Letter 4026, Withdrawal Cover Letter

cc: Chief, Appeals

Internal Revenue Service Department of the Treasury

Date:

IRS Employee to Contact:

Employee Identification Number:

Contact Telephone Number:

Previously, the Internal Revenue Service filed a Notice of Federal Tax Lien against your property. This notice is being withdrawn under the provisions of Internal Revenue Code  section 6323(j). Enclosed is a copy of the Form 10916(c), Withdrawal of Filed Notice of Federal Tax Lien, that we have mailed to the local recording office for filing.

The withdrawal of the Notice of Federal Tax Lien does not affect the statutory lien provided by Internal Revenue Code  section 6321; it simply relinquishes any lien priority obtained by the Internal Revenue Service when the notice was filed.

You may present your copy of the withdrawal form to any credit reporting agency, financial institution, or other creditor as you deem appropriate.

If you have any questions, please call the person whose name and phone number are shown above.

Sincerely yours,

Group Manager

Enclosures

Form 10916(c)

Letter 4026 (xx-2011)

Catalog Number 47462E

IRSIG SBSE-05-0312-029

Reissuance of Interim Guidance for Withdrawal of Notice of Federal Tax Lien in Direct Debit Installment Agreement Situations
FULL TEXT:

March 13, 2012

Control Number: SBSE-05-0312-029

Expiration: December 31, 2012

IRM Impacted: 5.12.3

MEMORANDUM FOR DIRECTORS, COLLECTION AREA OPERATIONS DIRECTOR, ADVISORY AND INSOLVENCY DIRECTOR, FILING AND PAYMENT COMPLIANCE (SB) DIRECTOR, FILING AND PAYMENT COMPLIANCE (WI) DIRECTOR, CAMPUS COMPLIANCE SERVICES (CINCINNATI)

FROM:

Scott D. Reisher /s/ Scott D. Reisher

Director, Collection Policy

SUBJECT:

Reissuance of Interim Guidance for Withdrawal of Notice of Federal Tax Lien in Direct Debit Installment Agreement Situations

This is a reissuance of the Interim Guidance signed April 7, 2011, under control number SBSE-05-0411-036. The purpose of the Interim Guidance is to provide instruction for processing requests for withdrawal of notices of federal tax lien when the taxpayers are in an established Direct Debit Installment Agreement (DDIA). Internal Revenue Manual (IRM) 5.12.3 , Certificates Relating to Liens, will be revised to include the information in this memorandum. Please ensure that this information is distributed to all affected employees in your organization.

Internal Revenue Code (IRC)  section 6323(j) provides that the Internal Revenue Service (IRS) may (but is not required to) withdraw a Notice of Federal Tax Lien (NFTL) if it is determined that certain criteria are met, including if the taxpayer has entered into an installment agreement ( section 6323(j)(1)(B)). Effective immediately, we are expanding current policy to allow a withdrawal under  section 6323(j)(1)(B) when the taxpayer has entered into a DDIA (subject to the conditions specified below).

This Interim Guidance memorandum sets forth the procedures for this type of expanded withdrawal based on the current delegation orders. Additional guidance will be provided as revisions to the delegation orders are implemented.

The guidance contained herein regarding conditions for withdrawal is specific to DDIAsituations. Conditions for other types of withdrawals remain unchanged. Taxpayers may apply for a withdrawal under any provision of  IRC 6323(j), including 6323(j)(1)(B), and, except as otherwise described in this memorandum, all procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for withdrawal remain in effect.

Procedures

The following types of taxpayers qualify for withdrawal of the NFTL under this DDIA provision:

Individual Master File (IMF);
Business Master File (BMF) (income tax only); or
BMF out of business (any type of tax).
Generally, a request for withdrawal under this provision will be approved if all of the following conditions are met:

The aggregate unpaid balance of assessments is $25,000 or less;
Note: The unpaid balance of assessments includes tax, assessed penalty and interest, and all other assessments on the tax modules. It does not include accrued (i.e., unassessed) penalty and interest.

If pre-assessed taxes are included, the pre-assessed liability (including tax, penalty, and interest up to the date of expected assessment) plus unpaid balance of other assessments must be $25,000 or less;
The total tax liability will be fully paid in 60 months, or the agreement will be fully paid prior to the Collection Statute Expiration Date (CSED), whichever comes first (Use Integrated Data Retrieval System (IDRS) Command Code (CC) ICOMP);
The taxpayer requests the withdrawal in writing;
Note: Form 12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the preferred format for the taxpayer's request; however, any written request that provides sufficient information may be used for processing (see IRM 5.12.3.32 ).

The taxpayer is in compliance with other filing and payment requirements;
The taxpayer is under a DDIA;
At least three consecutive electronic payments (generally received on a monthly basis) have been processed under the DDIA and there have been no defaults in payment under this, or any previous, DDIA; and
The taxpayer did not previously have a withdrawal of lien for any of the modules included in the DDIA (e.g. TC 583 dc 03 on module). This excludes previous withdrawals for improper filing under  IRC 6323(j)(1)(A) (e.g., TC 583 dc 02 on module).
Requests for withdrawal from taxpayers in a DDIA will be processed as follows:

1. Requests will be reviewed for the Collection field employee assigned the taxpayer's case or, if the case is not assigned, forwarded to Advisory for review.Note: The filing location of the NFTL determines to which Advisory office the request should be referred. (See Publication 4235)
2. The reviewing employee will control the receipt of the request and document any actions relative to the review on the control system applicable to the employee's function (e.g., Integrated Collection System (ICS)).
3. The reviewing employee will ensure that the conditions for DDIA withdrawal set forth above are met.
a. If the conditions are not met, the employee will issue a letter to the taxpayer denying the request and informing the taxpayer of their appeal rights under the Collection Appeal Program (CAP).
b. If conditions for withdrawal are met, the reviewing employee will: prepare a memorandum outlining the case facts and recommending the withdrawal; secure his/her manager's approval on the memorandum; and forward the memorandum, withdrawal request, and other pertinent documents to Advisory for approval.
4. Upon receipt, Advisory will open a Non-field Other Investigation (NFOI) control on ICS, if not already done, and review the withdrawal package. The extent of the review will depend on the function submitting the package.
a. If the package is received from the Collection Field function and was approved by a Group Manager, Advisory only needs to conduct a cursory review.
b. If the package is received from any other function, Advisory will complete a full review of the package and application to make the withdrawal determination.Note : Requests for withdrawal received from Appeals as the result of a timely Collection Due Process, Equivalent Hearing, or a Collection Appeal Program case will be processed in accordance with IRM 5.1.9 Advisory only needs to confirm the accuracy of the Form 13794, Request for Release or Withdrawal of Notice of Federal Tax Lien.
5. Upon concurrence of the withdrawal by Advisory management, Advisory will:
a. Prepare and forward Form 13794 to Centralized Lien Processing (CLP) or input the withdrawal directly into the Automated Lien System (ALS); and
b. Prepare and forward Letter 4026, Withdrawal Cover Letter, to CLP.Note : Requests and documents forwarded to CLP should be by secure email.
6. CLP will print the Form 10916, Withdrawal of Filed Notice of Federal Tax Lien, from ALS and then:
a. Send Part 1 to the applicable recording office with the filing fee; and
b. Associate Part 2 with the corresponding Letter 4026 and mail the withdrawal to the taxpayer.
7. Advisory will close its NFOI control on ICS after transmitting the documents to CLP. Actions taken by CLP relative to the withdrawal can be viewed on ALS.
Taxpayers making payments under any other type of installment agreement are not eligible for consideration for withdrawal under the conditions specified above unless they convert to a DDIA and otherwise meet the conditions. Taxpayers are not precluded, however, from requesting a withdrawal under any provision of the  IRC 6323(j).

If a taxpayer defaults on making payment under the DDIA after the NFTL is withdrawn, a new notice of lien may be filed, if appropriate.

Note : The above revisions apply only to a taxpayer's eligibility for withdrawal consideration. They do not impact the criteria for a taxpayer's eligibility for a DDIA.

In addition to the above:

The method of distributing copies of other approved withdrawal documents will be revised to be consistent with this memorandum. Specifically, Advisory will forward Form 13794 to CLP or input the withdrawal to ALS directly, and CLP will issue a copy of the withdrawal to the taxpayer with the Withdrawal Cover Letter provided by Advisory.
Letter 4026 will be used as the cover letter for all regular withdrawal requests (i.e., those done before the lien is released).
Except as otherwise described in this memorandum, all procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for withdrawal remain in effect.

If you have any questions, please contact me, or a member of your staff may contact Theresa Miliote, Program Manager or Kyle Romick, Senior Program Analyst.

cc: Chief, Appeals

IRSIG TAS-13.1-0310-003

Interim Guidance on Recommending the Non-filing of Notices of Federal Tax Lien in Certain Situations
FULL TEXT:

March 31, 2010

Control No: TAS-13.1-0310-003

Expires: March 30, 2011

MEMORANDUM FOR TAXPAYER ADVOCATE SERVICE EMPLOYEES

FROM:

Nina E. Olson /s/

National Taxpayer Advocate

SUBJECT:

Interim Guidance on Recommending the Non-filing of Notices of Federal Tax Lien in Certain Situations

This memorandum is part of a series that consolidates and clarifies current guidance in different Internal Revenue Manual (IRM) provisions and TAS training materials. 1 The purpose of this memorandum is to help Case Advocates and Local Taxpayer Advocates think through, in the context of the existing guidance, how they should advocate on behalf of taxpayers with respect to the filing of a Notice of Federal Tax Lien (NFTL) in cases involving installment agreements (IAs), Currently Not Collectible (CNC) status, or offers in compromise (OICs). There are certain situations in which the IRM requires automatic NFTL filingwithout considering individual taxpayer facts and circumstances and without managerial review. 2 In these situations, TAS employees need to investigate the case and apply the factors described in this memorandum to determine whetherthe filing of an NFTL is appropriate. TAS employees should advocate for the non-filing of an NFTL when it is appropriate based on the taxpayer's facts and circumstances. TAS employees do not make the actual lien determination.

Background

 Section 3421 of the IRS Restructuring and Reform Act of 1998 (RRA98) provides that, where appropriate, a supervisor review the proposed lien filing, considering the amount due and the value of the taxpayer's assets. 3

In addition, Internal Revenue Code (IRC)  § 6323(j)(1) provides the IRS a discretionary mechanism for withdrawing the NFTL when one of the followingcriteria is met:

(A) The IRS filed the NFTL prematurely or otherwise not in accordance with procedures;
(B) The taxpayer entered into an installment agreement to satisfy the liability (unless the IA provides otherwise);
(C) The withdrawal would facilitate collection; or
(D) The withdrawal is in the best interests of the taxpayer (as determined by the National Taxpayer Advocate) and the United States. 4
In these situations, Case Advocates should advocate for the non-filing of a lien by arguing that the IRS should not file an NFTL because it would meet the criteria for withdrawal once filed.

When is a Lien Determination required?

IRM 5.19.1.5.5 describes the four (4) types of installment agreements that TAS employees have the delegated authority to accept: (1) streamlined (up to $25,000), (2) non-streamlined (up to $100,000), (3) guaranteed (up to $10,000), and (4) in-business trust fund express (up to $10,000). An NFTL determination is not required for installment agreement types (1), (3), and (4), but a lien determination is required for non-streamlined installment agreements (NSIAs). A lien determination is also required when placing an account into CNC status perIRM 5.12.2.4.1(1) if the balance owed is over $5,000. Similarly, IRM 5.8.4.9 requires a lien determination in OIC cases where the unpaid balance of assessment is $5,000 or more and the offer is being rejected or accepted with deferred payment terms.

Determining when to advocate for the non-filing of an NFTL

In situations where the taxpayer's individual facts and circumstances meet the criteria in IRM 5.12.2.4.2(1)-(8) for not filing or deferring an NFTL, or one of the IRC § 6323(j)(1) requirements for an NFTL withdrawal, Case Advocates should advocate against the filing of an NFTL. 5

When making the decision to request that the operating division refrain from filing an NFTL, you must carefully evaluate all of the facts and circumstances including the following:

Compliance History. Has the taxpayer had prior balances due? If so, how recently? Would the NFTL filing jeopardize the taxpayer's ability to comply with the tax laws in the future? The fact that a taxpayer has never had a delinquent tax account before or has not had a delinquent account in recent years should weigh significantly in favor of refraining from filing an NFTL.
Reasons for noncompliance. Is the taxpayer's noncompliance attributable to a one-time unusual or catastrophic event, such as a heart attack, hurricane, or a loss of job? Are there extenuating circumstances that may contribute to the noncompliance? The following situations are examples of such extenuating circumstances: after a stroke, the taxpayer fell behind in estimated tax payments, or after the loss of a job, the taxpayer incurred a ten percent penalty for early withdrawal from an IRA. In such situations, where the taxpayer has been historically compliant except for a one-time catastrophic event, filing of an NFTL will harm the taxpayer's ability to repay his or her tax liability and remain compliant in the future.
Hamper Collection. Will the filing of an NFTL hamper the collection of tax? If not filing the NFTL will significantly impair the IRS's ability to collect the tax, this factor should weigh in favor of filing an NFTL.
Undue Harm to the Taxpayer that Reduces Collection Potential. Consider whether the filing of the NFTL will harm the taxpayer's financial viability, thus reducing collection potential, i.e., the filing prevents the taxpayer from obtaining or retaining employment or obtaining the financing necessary for a business taxpayer to remain in business. If the filing of the NFTL unduly harms the taxpayer and reduces collection potential, this factor should weigh in favor of refraining from filing an NFTL.
Payment before the Collection Statute Expiration Date (CSED). Will the proposed Installment Agreement fully pay the taxpayer's balances owed prior to the expiration of the CSED? If the taxpayer can pay in installments before the CSED, this factor will weigh in support of a determination not to file an NFTL.
Existence and Value of the Assets. Are there assets, including real and personal property, to which the NFTL can attach? Is the taxpayer likely to acquire assets in the future? If so, determine the net equity in the assets. Research IRS databases and available third-party information concerning the taxpayer's assets, income, and the value of the equity in the assets. Where appropriate, request and review taxpayer financial information, including Forms 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Forms 433-B, Collection Information Statement for Businesses. If you have access, search assets on Accurint, a web-based asset locator system. Seek ROTA assistance if necessary to assist you with equity determination. If the NFTL will not attach to property with significant value, or if the taxpayer needs the equity to cover an anticipated, necessary expense, this factor will weigh in favor of a determination to refrain from filing an NFTL.
In analyzing your case, consider all the factors and determine whether the NFTL filing is appropriate. Remember that this is not a complete list of factors, and that you should consider other relevant factors depending on the facts of your case.

Note: If at any time you need assistance in determining whether it is appropriate to request the non-filing of an NFTL or whether the taxpayer owns assets, please contact a ROTA to discuss the individual facts and circumstances of your case. ROTAs have access to Accurint.

Example 1

You have been assigned the case of Taxpayer A, who owes $10,000 in income tax, penalty, and interest for 2008. The compliance history shows that Taxpayer A has been compliant in recent years and any past delinquencies were promptly resolved. A review of the taxpayer's Collection Information Statement (CIS) shows that he can afford $150 per month. It will take the taxpayer over 60 months to pay the full balance, but the debt will be paid prior to the expiration of the CSED. The CIS also shows that Taxpayer A has no assets except his home, which has a fair market value (FMV) of $350,000 and a first mortgage of $347,000. Thus, there is no equity in the home. The taxpayer has requested a non-streamlined installment agreement to fully pay the tax debt; although Taxpayer A owes less than $25,000, the liability will not be paid within 60 months.

In general, you should advocate for the non-filing of the NFTL as this taxpayer has been compliant in the past, the account will be paid prior to the expiration of the CSED, and the harm to the taxpayer would outweigh the benefit to the government because the taxpayer has no equity to which the lien could attach.

Example 2

You have been assigned the case of Taxpayer B. The facts are the same as in example 1 above, but the taxpayer has equity of $200,000 in the house, i.e., sufficient equity against which to borrow. However, the taxpayer does not want to liquidate or borrow against the house and has requested a non-streamlined IA to fully pay the liability; although Taxpayer B owes less than $25,000, the agreement will not be paid within 60 months.

In these circumstances, the government's interests may outweigh the harm to the taxpayer who refuses to borrow against the property to pay the tax liability. Thus, you conclude based upon an evaluation of all of the facts and circumstances that you cannot recommend that the IRS refrain from filing an NFTL. You will prepare an OAR requesting that the OD make the lien filing determination. The taxpayer will have a right to a CDP hearing if the IRS files the NFTL.

Example 3

The facts are the same as in example 2, but the taxpayer has a special-needs child and must utilize the equity in the house to provide for ongoing medical and other care for the child. In these circumstances, you should advocate that the IRS refrain from filing an NFTL.

Example 4

Taxpayer C, who is self-employed, owns an insurance business with an unpaid combined income and employment tax liability of $62,500 for tax years 2008 and 2009. The taxpayer filed Form 911 stating that he just received a notice and demand for payment of the outstanding tax liabilities and is worried about the IRS filing an NFTL. The taxpayer's financial information shows a substantial decline in gross receipts and an increase in unpaid accounts receivable. The taxpayer has requested that the IRS accept an offer in compromise. If the IRS files the NFTL, the taxpayer will lose his employment because the state insurance licensing board requires insurance agents to have a clean credit history. You determine the OIC is acceptable according to the IRM guidelines. You also determine that the NFTL will not be in the best interests of the taxpayer and the United States because it will hamper collection and future tax compliance if the taxpayer cannot retain his employment.

In these circumstances, you should advocate that the IRS accept the OIC and that the IRS refrain from filing an NFTL. The filing of the NFTL will hamper collection, prevent the taxpayer from maintaining employment and staying in business, and jeopardize the taxpayer's ability to comply with the tax laws in the future.

Sending an Operations Assistance Request (OAR)

If after weighing all facts and circumstances of your case, you have determined that TAS needs to advocate for the non-filing of an NFTL, elevate the case to your Local Taxpayer Advocate (LTA) and simultaneously forward the OAR to the Operating Division (OD) requesting that the IA, OIC, or CNC be accepted without filing an NFTL. In cases where you are accepting a non-streamlined installment agreement based on delegated authority, 6 accept the IA and simultaneously forward the OAR requesting the non-filing of an NFTL. In all cases, the OAR should request an OD manager's review any determination denying TAS' recommendation not to file the NFTL. If the OD does not agree with your recommendation not to file the NFTL in any of these situations, immediately notify your LTA to discuss the case with the OD manager. If the OD manager disagrees with the non-filing of an NFTL, the LTA should promptly consider issuing a Taxpayer Assistance Order (TAO).

When sending an OAR, request expedited handling. Including the following language in the OAR will support your recommendation and clarify the issue:Due to the above taxpayer's financial situation, we are recommending [insert -the account be placed into CNC status / the offer in compromise be accepted / acceptance of the IA]. Due to the amount of the liability, a Lien Determination is required.

Based on a thorough review of the taxpayer's information (including IRS and available third party information) concerning their assets, income, and the value of the equity in the assets [insert specific facts and circumstances regarding the taxpayer], TAS has concluded that [insert all that applies: the NFTL will not attach to property / the NFTL will hamper collection / the harm to the taxpayer will outweigh the benefit to the government/ or the NFTL filing will jeopardize the taxpayer's ability to comply with the tax laws in the future]. Therefore, we are recommending that the IRS refrain from filing an NFTL so long as the taxpayer remains compliant.

If you do not agree with this recommendation, please have your managerimmediately contact the Local Taxpayer Advocate (Insert name and phone #) to discuss further.

In cases where after considering the relevant factors, TAS decides not to recommend that the OD refrain from the filing of the NFTL, forward the OAR to the OD to request that the OD make the lien filing determination.

Issuing a Taxpayer Assistance Order (TAO)

If the OD does not agree to refrain from filing the NFTL, evaluate the reasons given in support of filing the NFTL. If you still disagree, elevate the case to the LTA to consider issuing a TAO. 7 If the LTA decides to issue a TAO, follow the procedures in IRM 13.1.20 , TAS Taxpayer Assistance Order Process. The TAO should order the IRS to refrain from filing the NFTL and must explain why, based on the law and the facts of the case, the filing is not appropriate.

When preparing the TAO, you should include the following language, where appropriate:

Based on a thorough review of the taxpayer's information (including IRS and available third party information), the criteria for not filing a lien found in IRM 5.12.2.4.2 have been met. [Discuss how the various criteria listed in this IRM have been established in this case.] Therefore, the NFTL should not be filed so long as the taxpayer remains compliant.

Please contact James Book, Technical Analysis and Guidance, at (816) 291-9944, for further information.

1
  See, e.g., TAS, Interim Guidance on Handling Collection Cases where Economic Hardship is Present but the Taxpayer has not Filed all Required Returns, Control No. TAS-13.1-0110-001(Feb. 28, 2010).
2
  For example, when the account is placed in CNC status, the IRM requires NFTL filing for any unpaid balance of $5,000 or more, or if the IRS is unable to locate or contact the taxpayer, or the taxpayer is experiencing an economic hardship. IRM 5.12.2.4.1(1) (Oct. 30, 2009); IRM 5.19.4.5.2 (Apr. 26, 2006). The IRM requires the filing of an NFTL for non-streamlined IA accounts of more than $5,000. IRM 5.19.1.5.5(19) (Dec. 4, 2009). Similarly, for example, an NFTL would normally be filed with OICs on unpaid balances of $5,000 or more and the offer is being rejected or accepted with deferred payment terms. IRM 5.8.4.9 (Sept. 23, 2008).
3
   RRA 98, Title III, § 3421, Pub. L. No. 105-206, 112 Stat. 685, 758 (1998).
4
   IRC § 6323(j);  Treas. Reg. § 301.6323(j)-1.
5
  Under IRM 5.12.2.4.2(8) a taxpayer may also submit a faxed request for non-filing of the NFTL if the revenue officer has contacted the taxpayer by phone or in person. Such a request may include the reasons why the taxpayer wishes the NFTL not to be filed, which the RO should note in the case history.
6
   Per Delegation Order 13-2 (Rev. 1), TAS has the authority to accept installment agreements under the procedures contained in IRM 5.19.1.5.4 (or successor provisions).
7
  The LTA may also consider pursuing an appeal under CAP. See IRM 5.19.4.5.2(12)(b) which provides that “if a taxpayer expresses serious objections regarding the lien filing ... treat it as a Collection Appeal Program (CAP) before filing the lien.”



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